DAILY SUMMARY - 1946/02/18

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 03164669
• Document Creation Date: August 3, 2018

ko, Approved for Release: 2018/03/26 C03164669
APPROVED FOR RELEASE - Historical Programs Staff DATE: 15-Mar-2018
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EUROPE
1. CZECHOSLOVAKIA: Borders closed to Americans after raid�
. The Czech Government has closed itsor ers.O-M7=an
and is holding a US Captain and two NC 0's in connection with
. the crossing of the frontier by a small American force on 11
February. Czech officials charge that an underground dump
was dynamited. They plan to hold the men until the materiel
� they claim has been remolied (reportedly radar) is returned
and a US explanation is given. The US Ambassador believes
the Czech Government has evidence the raid was authorized at
a high level.
2. HUNGARY: Financial deterioration uciApiLleteenekalkIL--
Schoenfeld reports Hungarian inflation ncw mounting at a run-
away pace. During the past week the American dollar increased
from 800,000 to over 1,800,000 pengoes, and prices more than
doubled, with currency in circulation now over two trillion
pengoes. Schoenfeld predicts imminent loss of all currency
value. iwennix,hile Soviet penetration proceeds; the Hungarian
Economic Council has decided to transfer to the USSR all
ba.uxite shares claimed by the Soviets to have been German-
owned. These shares control 35 percent of Hungary' s bauxite
resources.
3. HUNGARY: Akr.p.:_-,Q6L..all go.--Legation Budapest
learns that Hungary in negotiations with the USSR has insisted
that U.K, US and Netherlands also be permitted use of Hungarian
airfields and that vessels of any nation have access to Hungary's
.banubian ports.
4. SPAIN: ogiuga.jaociAbattaf.ne,--Despite complete silence on the
� part of the local press, Embassy Madrid reports that the f000t
shortage is ci�itical and that Spain must import 800.000 tons of
-cereals during the next six months to maintain a minimum daily
diet of 1400 calories. The food scarcity, coupled with increasing
prices, is contributing heavily to general political instability, and
there is little likelihood of immediate improvement in view of
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Approved for Release: 2018/03/26 C03164669
APPROVED FOR RELEASE - Historical Programs Staff DATE: 15-Mar-2018
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Spain's inability to pay for needed imports.
5. SPAIN: US urged to delay oliy--In a detailed
analysis of the forces within Spain working toward a change
in the Government, Embassy Madrid advises against US public
support of any new regime. Because Leftist and Rightist forces
are so equally matched, Ambassador Butterworth feels that no
interim regime couki meet US long-range objectives for orderly,
democratic government.
FAR EAST
6. CHINA:. New exge and trade 01841�The 'US Treasury rep-
resentative in Chungking has transmitted the proposed new
Chinese exchange and trade regulations as drafted by Arthur
Young and two officials of the Bank of China. These proposals
have received approval in substance by Chiang and Soong and
are now being studied by the Ministry of Finance.'
The drafters have recommended that China should (a) aim
at effecting major financial and economic readjustments by the
time sterling is restored to free convertibility, (b) establish
flexible exchange and trade controls and provide adequate
machinery to regulate exchange and imports, (0) Seek as -rapidly
as possible a sound, stable and free currency system consonant
with Bretton Wdodz; (d) remove trade barriers, (e) allocate five
hundred million US dollars for future currency reform and Set
aside an exchange fund for I 48 operations, and (f) apply no
penalty measures to blocked assets abroad, use of which should
be directed into channels of advantage to China.
The p .oposals provide for the regulation of foreign ex-
change transactions and disposal of blocked property by the
Central Bank which would designate other banks as well as
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Approved for Release: 2018/03/26 C03164669
Approved for Release: 2018/03/26 C03164669
APPROVED FOR RELEASE - Historical Programs Staff DATE: 15-Mar-2018
dealers to deal in foreign exchange and foreign notes.
Official exchange rates would be abolished and the public
would be permitted to buy and sell foreign exchange only
through the appointed banks. Individual foreign currency
accounts would be restricted and withdrawals made only for
approved purposes. Penalties for violation of regulations
include fines of up to one-half the amount of the illegal trans-
action and the debarring of banks or individuals from further
foreign exchange transactions.
With respect to foreign trade policy and temporary foreign
trade regulations, the proposed regulations would permit unres-
tricted trade except for a few less essential imports subject to
customs license control and a brief prohibited list of both ex-
ports and imports. A temporary import program committee
-would be set up under the Supreme Economic Council.
'7. KOREA: Consultants to Korean Joint Commission�SWNCC has
recommended that the US and USSR appoint non-extremist Koreans
-.to the Korean joint Commission. General Hodge has reported that
the group chosen in the US zone will include leaders of all major
� parties except the Communists. Extreme right wing leaders, he
� declares, must be included because their personal popularity is
such that even Communists include them in any "slate".
S. N.E.I.: palltaggijaitiatia_gsaguagg--The US Consul General
in Batavia reports that Clark Kerr and van Mook appear apti-
mistic and that Sjahrir has accepted the Dutch proposals as a
"basis of discussion". Sjahrir, however, has privately said that
the proposals contain conditions which are impossible, and that
if he aggreed to them, he would be immediately repudiated by the
Indonesians. Such pessimism is possibly calculated to encourage
US pressure on the Dutch.
THE AMERICAS
9. ARGENTINA: Peron reported to have evidence--The US Charge
In Buenos Aires has heard that Peron has documentary and re-
corded evidence to substantiate certain of his charges against
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Braden and Lang.
10. ARGENTINA: Deportation of_Axis agents�Charge Buenos
Aires reports that a number of Axis agents were deported
on 16 February and action is being taken against others.
Argentina's compliance is better than was anticipated.
11. BRAZIL: Blue Book�The Brazilian Foreign Minister has
told Ambassador Berle that Brazil wishes to follow the US
lead in the Argentine situation, and would like to know how it
can help.
Embassy Madrid reports that Brazies Ambassador has
told the Spanish Foreign Ministry that, sunce Eduardo Aunos
(war-time Spanish Minister of Justice) was implicated by the
Blue Book, Brazil could not now receive him as the ne.wAmbas-
sador from Spain.
crtir--SECTMT
Approved for Release: 2018/03/26 C03164669